US bank to switch FX trading from Moscow to London

The sanctions placed on Russia in 2014 continue to reduce business causing intenational banks and financial services to move to the UK and the EU for a more business fiendly environment.

David Sapsted

17 December 2018

Morgan Stanley is to close its equities and foreign exchange trading desks in Moscow and relocate to London.

Western banks continue to leave Moscow following sanctions on Russia

The Financial Times said that Morgan Stanley had taken the decision because a stagnant Russian economy and sanctions were continuing "to chip away at western investment banks’ business there".The report added, "The US bank will relocate its Russian trading businesses to London, eventually resulting in a halving of its Moscow banker staff to about 30. Some jobs would relocate to London and others would be cut."Western investment banks have cut back their Moscow operations drastically since 2014, when the US and EU sanctioned Russia over the Ukraine crisis and plunging oil prices prompted a recession. The promise of further US sanctions has seen business drop even more."

Increasing costs of business in Russia outweigh benefits

The bank declined to comment on the report but said in a statement, “Morgan Stanley remains committed to Russia and will maintain our long-standing, on-the-ground presence in Moscow and ensure that our clients in Russia continue to benefit from the capabilities of the firm, in particular as it relates to investment banking and global capital markets.”Bloomberg commented that Russian markets had been punished by increasing sanctions imposed by the US and European Union to punish the Kremlin since the 2014 annexation of Crimea from Ukraine."Morgan Stanley joins other foreign lenders that were once major players locally, including Deutsche Bank AG and Credit Suisse Group AG, that have pulled back in Moscow as the costs of operating became too steep for the potential rewards," Bloomberg added.

Another investment bank, IIB, move from Moscow to Budapest for the benefits of the EU

Meanwhile, the board of governors of the Moscow-based International Investment Bank (IIB) have unanimously decided to relocate the lender's headquarters to Budapest.Hungary's Minister of Finance Mihály Varga said in a statement that the board of governors mandated the bank's chairman to sign an agreement on the relocation with the Budapest headquarters expected to open in the second half of 2019, with the entire relocation from Moscow taking up to three 2-3 years.Mr Varga said the relocation of the headquarters to Budapest could have a marked positive effect on IIB's operations and improve the bank's integration with the economic system of the European Union. The move also expands the opportunities for cooperation with other financial institutions, he added.Established in 1970, the IIB is a multilateral institution for development that focuses on supporting SMEs and socially significant infrastructure projects, noted MTI. The bank's members are Bulgaria, Hungary, Vietnam, Cuba, Mongolia, Russia, Romania, Slovakia and the Czech Republic.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online DirectorySubscribe to Relocate Extra, our monthly newsletter, to get all of the international assignments and global mobility news.